Monday, October 7, 2013

The Network Costs Of Affordable Housing

A friend told me a story the other day, about how his son when first starting out in working life lived in a shoebox apartment and his kids had to study under park lamps, because the apartment complex was too noisy from all the neighbours watching TV.

Just because you can afford to own a home, doesn’t make it a suitable place for bringing up children…or for addressing urban poverty or multi-generational inequality (excerpt):

...Consider low-income housing. Most developing countries, and many rich ones, define their housing deficit according to the number of families living in units deemed socially unacceptable…

…The problem is that people do not demand houses; they demand habitats. A house is an object; a habitat is a node in a multiplicity of overlapping networks – physical (power, water and sanitation, roads), economic (urban transport, labor markets, distribution and retail, entertainment) and social (education, health, security, family, friends). The ability to connect to all of these networks makes a habitat valuable...

...So, if the deficit being measured is one of houses rather than one of habitats, the solutions often do not solve the real problem. A housing minister who is told to build a certain number of houses will likely fail to build an equivalent number of well-connected habitat nodes…

…Moreover, if the housing deficit is diagnosed as a dearth of adequate housing, then the solution is to build more houses for those who lack it – that is, the poor. But this is like assuming that new cars should be built for those without them…

…It gets worse. Because the poor cannot buy adequate housing on their own, public resources must be used…To maximize the number of units built, housing ministries make sure that projects meet minimum specifications below a certain per-unit cost threshold. As a result, developers look for the cheapest land, which is obviously the least connected to the networks that would make it more valuable.

This approach has ended up exacerbating the segregation of the poor...

Key question: In our drive for affordable housing, are we actually solving a problem, or creating one?

8 comments:

then there is issues of high rise building maintenance corporation that has been in deadlock in the past several years.

We cannot expect a comfortable living arrangement if all this issues remain unresolved. There is a tribunal set-up to tackle this specific issues. However there is still some ambiguous ground that still need to be tackled - legally speaking.

P/S: I read a study revealed that 60% of Penang High Rise residence do not pay maintenance fee. This is of course in the early 2000s.

perhaps a high rise, flat development like singapore's HDB accommodated with shutter bus (BRT?) to nearest public transport stations can solve the connectivity problems, thus making affordable 'habitats' viable

2. And they missed out all the items that will become cheaper (e.g. cars, furniture);

3. At 4%, GST will be almost revenue neutral i.e. the total tax burden doesn't change;

4. GST/VAT is usually implemented not because deficits are high, but because it's more efficient (doing business is cheaper) and because of tax evasion and avoidance. Less than 40% of the workforce submits a tax return, less than 10% pay any tax, and less than 0.3% pay the top rate of income tax. Where's the rest?

5. Dr Woo also needs to relook his figures. Government revenue since 1970 has averaged 22.5% of GDP. 2012 revenue was at 22.2%, in 2000 it was 17.4%. That doesn't look like it has "fallen tremendously".

Ok, I cheat. I've got some of the numbers MoF is working with, so I've got a pretty good idea what will happen.

IMO, the PPR are pigeon holes and not suitable for families, they are cramped, poor sanitation, poor PT access with people fighting over car spaces, unsafe and have no proper public amenities.

Despite what sceptics say about singapire aka low wages, por cpf return and few social services, the way they implmented the HDB is exmplematy, my Singapirea cousin says that it is safe, clean with many amenities for community life, and she is Malay and appreciates the HDB environment.

On the other hand, a tecnician turned engineer at ,y worjplace commented how he has to get out of PPR because of the bad environments for his children, he is able to afford a terrace house because he and his wife decided to have only one second hand car for transport and manage their finances carefully.

Najib seem obsessed with the nos of PPR units, not on the quality. I doubt the govt will figure that out by 2017

While I agree the quality of PPR houses/development needs to be improved, a key factor to improve/maintain the overall living condition that is often missing in high density housing development in M'sia is the degree of ownership and accountability of the residents to take care of the common facilities.

Most Malaysian still don't have the correct mindset to live in these kind of housing. Even at my not-so-medium cost apartment, the residents have to be regularly monitored and reminded to throw their rubbish properly! Vandalism still happens from time to time.

Fixing the problem requires not only better design but also education and change of mindset.

All well and good in identifying the problem. But what is the solution? Our developers are not interested in building low-cost housing so the burden still falls to the government to construct low-quality PPRs.

It's fine to laud the HDB for housing 85% of the population but I think they were only able to do that because the Singapore government has a tight control on land and land use. Here it's such a free for all that people build serviced apartments on tanah sekangkang kera.

Public transport - improvements seem too slow and it's hobbled by a national car industry lobby.

It's unfortunate, but I have to say that government has to do more, because I don't expect the private sector to come up with a solution.

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About Me

An applied and practicing economist in the Malaysian financial sector.

The purpose of this blog was first to have a way to put down and present my ideas, work in progress, and thoughts on the Malaysian economy. The second reason was to hopefully attract critiques and feedback, that would help me improve on my own understanding of the way the world works, or at least, this little corner of it.